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Mandatory Labelling or Import Ban?: Two-Country Trade with Biotechnology Products

Listed author(s):
  • Jinji, Naoto

This paper examines trade and welfare effects of biotechnology. While biotechnology lowers production costs, it also lowers perceived quality of products. Without labelling, consumers cannot distinguish between biotechnology and conventional products. In a simple general equilibrium model of two-country trade, it is shown that when a biotechnology product is invented in one country, the importing country may lose from trade under free trade without labelling. The importing country can be better off by requiring labelling for the biotechnology product. If labelling cost is high, however, the importing country may prefer to ban the import of the biotechnology product.

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Paper provided by Graduate School of Economics, Hitotsubashi University in its series Discussion Papers with number 2003-03.

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Length: 20 p.
Date of creation: Apr 2003
Handle: RePEc:hit:econdp:2003-03
Note: This version: February 12, 2003
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